A leading expert on Atol has said the CAA is likely to do “whatever it can” to help Thomas Cook but he warned the travel group is living on “borrowed time”.

Legal advisor to the Association of Atol Companies, Alan Bowen, described Thomas Cook’s latest steps to secure a £1.1bn rescue deal as “positive” and said the CAA could extend Cook’s Atol licence by up to 14 days if needed.

This week Thomas Cook pushed back a meeting with lenders to vote on the terms of its takeover to next week, days before its Atol licence is due for renewal.

The vote was originally due to take place this week but it was feared a group of bondholders would block the deal unless they were guaranteed payouts.

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Thomas Cook postpones vote on takeover deal

On Monday, Thomas Cook filed bankruptcy papers in the US courts, which act to shield it from lawsuits by American creditors, and, crucially, triggers the payouts of default insurance for the group of bondholders.

Bowen, who was formerly head of legal services at Abta, said: “The news from the US is positive and if the insurers have given assurance to the bondholders then hopefully that will be sufficient reassurance they will get something out of the deal.”

Thomas Cook’s creditors are set to take key votes on September 27 and 30. Its Atol is due for renewal on October 1.

Bowen added: “We are living on borrowed time. The CAA will need an agreement in principal after the meeting on September 27 because they will only have the Monday and Tuesday to resolve the issue.

“The CAA will do whatever it can to make sure there is no failure, but it can’t break the rules. It can stretch them and I’m sure it will. But if they’re stretched and it failed, the claims would be higher.”

Thomas Cook is licensed to carry almost 2.5 million passengers – ten times what Monarch was licensed to carry when it collapsed in 2017.

Just over 480,000 unbonded passengers are due to fly in the first week of October, according to figures from OAG data.

Bowen warned: “If there was a failure there could be a domino effect for other businesses that are owed money or agents who have bought seat only.”

“The damage to consumer confidence in the industry would be enormous.”

City analyst Andrew Monk said: “Thomas Cook will probably survive because Fosun will make sure it does and do what is required. The bondholders will get what they want, shareholders will get nothing and the directors will walk away with their salaries.”

Under the proposed terms of the deal, Fosun, which owns 18% of Thomas Cook, will control 75% of the company’s tour operating business and up to 25% of its airline in exchange for a £450 million capital injection.

Debt holders and lending banks have agreed to put up the remaining £450 million in exchange for control of Thomas Cook’s airline and up to 25% of the tour operator.

Thomas Cook is also seeking an additional £200m lending facility to reassure lenders taking the total value of the deal to £1.1bn.

More: Thomas Cook files for bankruptcy protection to stop creditor lawsuits

Thomas Cook postpones vote on takeover deal